Should you buy Home Depot stock after solid Q2 results?
- Home Depot reports better-than-expected results for its fiscal second quarter.
- UBS analyst Michael Lasser reiterates his bullish stance on Home Depot stock.
- Shares of the home improvement retailer are down nearly 20% for the year.
Home Depot Inc (NYSE: HD) is in the green this morning after reporting better-than-expected results for its fiscal second quarter and reiterating its full-year guidance.
Is Home Depot stock a buy here?
Inventories up 38% year-on-year remained a challenge for the home improvement retailer. Still, Michael Lasser (Retail Analyst at UBS) said on CNBC’s “Squawk on the Street”:
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Home Depot is one of the best operated retailers on the planet. They’re taking share, they’re leveraging their expenses and they’re navigating through a really tricky environment quite well.
Transactions were down about 3.0% in the recent quarter. Still, he recommends that you buy Home Depot stock that has upside to $360 – another 10% increase on top of today’s gain.
Consumer is in a relatively good shape; it’s going to remain relatively steady. So, Home Depot is a stock, I think, you can make money on especially if you look over the next twelve months.
Home Depot Q2 financial highlights
- Net income came in at $5.17 billion versus the year-ago $4.81 billion
- EPS jumped to $5.05 from $4.53 in the same quarter last year
- Sales went up 6.5% year-over-year to a record $43.79 billion
- Consensus was $4.95 of per-share earnings on $43.36 billion in sales
- Comparable sales increased 5.8% – handily beating the expectations
- Average ticket was 9.1% bigger than Q2 of the previous year
Other notable figures and future outlook
Other notable figures in the earnings report include a 10 basis points hit to gross margin as cost of sales shot up 5.5%, as per the earnings press release.
For fiscal 2022, the retail behemoth forecasts about a 3.0% increase in sales. It expects mid-single-digit growth in EPS this year versus the consensus for a 6.0% increase. Home Depot stock is currently down nearly 20% versus the start of the year.